Bulgaria experienced only a minor increase in inflation following its adoption of the euro on January 1, according to Central Bank Governor Dimitar Radev. Public support for the common currency is reportedly increasing, with the ongoing war in Iran potentially providing an additional boost. In the lead-up to the currency switch, public support for the euro was relatively low.
Radev, now a member of the ECB Governing Council, stated that the inflationary impact was ‘limited and largely one-off,’ estimating it to be between 0.3 and 0.4 percentage points, similar to Croatia’s experience. Inflation in Bulgaria actually decreased in January to 2.3% from 3.5% the previous month, aligning with the Eurozone’s figures in March.
The minimal inflation impact has contributed to increased support for the euro, even from previously low levels. Radev noted that the war in Iran may further elevate support as households recognise the protection offered by the currency. Household support has risen from 45% before accession to 54%, while support within the business community is already strong and continues to rise.
Radev believes that the current global environment is likely to highlight the advantages of being part of the Eurozone. He suggests that more individuals will recognise the benefits of integration compared to remaining outside the union, further solidifying support for the euro in Bulgaria.
